Operating leverage is the sensitivity of a firm's ________ to changes in ________.
A) sales volume; the cost structure
B) margin of safety; ratio of fixed costs to variable costs
C) sales volume; the cost driver levels
D) net income; sales volume

Question

Quizplus · Accepted Answer

Operating leverage measures how a firm's net income responds to changes in sales volume, indicating the proportion of fixed and variable costs in the company's cost structure.

Operating Leverage Is the Sensitivity of a Firm's ________ to Changes